A company manufactures a chemical using two components. A and B. The standard information for one unit of the chemical is as follows. $ Material A 10 kg at $4 per kg 40 Material B 20 kg at $6 per kg 120 160 In a particular period, 160 units chemical were produced, using 1000 kgs of material A and 1460 kgs of material B. Required: Calculate the material usage, mix, and yield variance for each material.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
A company manufactures a chemical using two components. A and B. The standard information for one unit of the chemical is as follows.
| $ | ||
| Material A | 10 kg at $4 per kg | 40 |
| Material B | 20 kg at $6 per kg | 120 |
| 160 |
In a particular period, 160 units chemical were produced, using 1000 kgs of material A and 1460 kgs of material B.
Required:
Calculate the material usage, mix, and yield variance for each material.
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